Cybercrime is on the rise and this includes different sizes of crypto scams that happen every year. While there are countless incidences to date, we look at the top 10 ever crypto scams here.
Asides from hacks and thefts, scams are the next highest danger of dealing with cryptocurrencies. While there was a total of $4.26 billion lost in 2019, that figure climbed to a reported $14 billion lost in 2021. So, everyone needs to be more careful.
This post lists the top 10 crypto scams ever. It takes a look at how and why they happened, so you too can become a little wiser about the crypto underworld and learn to stay safe.
Related: Crypto Scams: How To Identify And Avoid Them
The 10 Biggest Crypto Scams
|4.||Thodex||$2.2 billion||Exit scam||2021|
|5.||Pincoin||$600 million||Exit scam/Ponzi||2018|
|7.||Gigi Brothers||$100 million||Phishing/hacking||2019|
|8.||ACChain||$60 million||Exit scam||2018|
|9.||Savedroid||$50 million||Fake exit scam||2018|
|10.||Plexcoin||$8 million||Exit scam||2017|
Scam Amount: $4 billion+
Founded by the Bulgarian crypto-queen Ruja Ignatova, Onecoin was a Ponzi scheme that showed just how silly human beings can be. It was meant to be a mine-able crypto coin, but there was no Blockchain.
Onecoin was not even decentralized. Rather, the founders kept the currency centralized in private servers and lied to the world. The system was a pyramid scheme, a business type that many of its core members were experienced in.
Members could buy educational packages, which included books and tokens they could then invest into mining new Onecoins to make a fortune. Exchange of the coins into other currencies was only possible through another internal marketplace, the xcoinx Onecoin Exchange.
Most of the founders have since disappeared or are in prison, but there is no sign of the founder, Ruja Ignatova. There is an upcoming movie about Onecoin though and it is called Fake! In it, Ignatova will be played by Kate Winslet.
Here are a few things to learn from this scam. 1.) If it is not decentralized, then it is not a Blockchain system. 2.) If you are not sure how it works, then leave it alone.
Scam Amount: $3.5 billion
Bitconnect was an open-source cryptocurrency, which is okay. However, it was connected to an HYIP (High Yield Investment Program) called bitconnect.co.
The goal was to allow users of the crypto coin to lend out funds in return for interest payments. You would have to trade in your Bitcoins for the Bitconnect tokens though.
Interestingly, the interest on the coin was 1% daily and you could compound it. This attracted lots of investors, but also raised the suspicions of several authorities, prompting investigations on Bitconnect by 2017.
By January 2018, the earning program closed down and users were refunded in BCC (Bitconnect) tokens and not Bitcoins. This led to a loss of confidence in the coin and it quickly went into a selloff from its nearly $500 high to just $0.40 a year later.
The lesson here is that HYIPs are almost always a scam. There are exceptions though. But not always.
Scam Amount: $3 billion
Founded by Chen Bo in 2018, PlusToken was another cryptocurrency Ponzi scheme. It targeted users in China and South Korea, but its operation method remained the same.
Users received a monthly interest payment for using the PlusToken wallet and purchasing the PLUS crypto coin using Bitcoin or Ethereum. In reality, the users’ interest payments were coming from the deposits of newer users.
PlusToken was masterminded by 27 persons, plus 55 others to make up 82 persons in total. Although the scammers disappeared to Cambodia when the scam came to light, most of them have been arrested and jailed.
Scam Amount: $2.2. billion
The first exit scam on this list and the most recent as well. Thodex was a Turkish cryptocurrency exchange, which initially had trading volumes in the billions of dollars before its abrupt exit.
Thodex announced in April 2021 that it was suspending trading and would be unavailable for a few days, while a partnership investment proceedings were ongoing for the company.
As thousands of users could not access their accounts and raised alarms, the authorities swung into action and launched investigations.
In the end, over 300K users lost 2 billion+ through the platform. The authorities arrested and prosecuted some of the scammers, but the founder, Faruk Fatih Özer had since left the country.
Scam Amount: $600 million
Around 2018, the Vietnamese company Modern Tech developed a cryptocurrency and launched it through an ICO. The Pincoin campaign was successful and the company raised over $600 million from about 32,000 investors.
Pincoin was supposed to provide constant returns to its investors. The promise was over 40% monthly returns, plus 8% commissions for every new member that you introduced.
Modern Tech initially paid these returns by cash. However, the company then switched to paying investors with an entirely new token that they had created, called iFan. And as trouble arose, the team vanished.
Again, the lesson from this scam is that high-yield investment programs are often scams. This was a classical pyramid/Ponzi scheme. And the high 8% commission meant that the investors often brought in their friends and relatives to get skinned together.
Secondly, anyone with a fundamental knowledge of technology or finance would have known to steer clear of the PIN project. Surely, some business ventures can return up to 40% per month. But if the fundamentals make no sense to you, then stay away.
Scam Amount: $300 million+
Promising investors a 10% monthly return on their capital, the GainBitcoin scam raked in over $300 million from unsuspecting Indian investors.
Founded by Amit Bhardwaj, the scam sold the Bitcoin-mining story to its investors. By buying the Gainbitcoin token, an investor contributes to the cloud-mining operations of the company and would receive monthly returns.
The only problem was that most of the money was used for paying fake interests and not for purchasing mining gear.
Bhardwaj was arrested in March 2018 but granted bail a year later. He died in January 2022 at the age of 38, from cardiac arrest and kidney issues.
7. Gigi Brothers
Scam Amount: $100 million
The Gigi brothers are the Israeli 31-year old Eli and 21-year old Assaf. These brothers were connected with various online and crypto crimes, including phishing and the Bitfinex hack.
Their phishing scam goes like this. 1.) They would lure potential investors from social sites or forums like Telegram and Reddit to fake crypto exchanges. 2.) When the potential investors try to log in, the brothers will steal their information. 3.) They will then use the details to log into the victims’ real accounts and transfer their crypto coins.
Other tricks they possibly used include promoting links to wallet management software. And when downloaded, these software allowed them to clear out the user’s account.
Eli, the older of the two, is a former IDF computer expert and hacker. The Bitfinex hack involved 119,000 stolen Bitcoins, although the level of their involvement is not well known. Both brothers were charged with stealing over $100 million in cryptocurrencies over many years.
Scam Amount: $60 million
ACChain is a decentralized asset tokenization platform founded in Shenzhen, China around 2017. Its goal was the provision of crypto liquidity by tokenizing physical assets.
Asset tokenization has lots of future potentials, so investing in such a startup makes very good financial sense. Many investors also found ACChain very promising, and the company managed to raise over $60 million.
However, a Reddit user posted a picture of an empty ACChain office in 2018, saying the team just left their computers and vanished. And the office additionally got raided some days later.
It should be obvious that this is not like other scams. While the ACChain project makes complete sense, the founders were not dedicated. Rather, they set out to defraud, as they were also implicated in other fraud schemes like Puyin coin and BioLifeChain.
Scam Amount: $50 million
Savedroid is a German software firm with the SVD cryptocurrency. The Frankfurt-based firm is founded by Yassin Hankir, who tweeted “Thanks guys! Over and out…” on 18 April 2018. Then the company website and channels went dead, with the homepage displaying the message “Aannd It’s Gone”.
Reported to have raised over $50 million, Savedroid investors were in a rage about the supposed exit scam. However, it later emerged that it was all a publicity stunt, designed to raise the people’s awareness of ICO scams.
Most scammers do not gloat about their scams with ridiculous online posts. So it is possible that the Savedroid exit scam was just a stunt, and not that Dr. Hankir initially stole the funds, but then got scared and reverted. All the same, he lost the trust of many supporters.
Scam Amount: $8
The U.S. Securities and Exchange Commission, which regulates the American financial markets, used an emergency asset freeze to halt a potential ICO scam in December 2017.
Plexcoin promised investors up to 13-fold returns in profit within a month. It was backed by three individuals, all from Canada. They also transferred all the raised funds to their private accounts and used them for personal expenses.
Dominic Lacroix is one of the individuals behind Plexcorp. He had a record of defrauding investors in a micro-loan venture, and so was banned from dealing in securities. He was ordered to pay back $3 million in Bitcoin within 24 hours and the authorities had to bring his seized computer into the courtroom, where he made the transfer.
Lacroix and the other two founders of Plexcorp, Sabrina Parais-Royer, and Yan Ouellet, were indicted by a U.S. grand jury in July 2020 for securities and wire fraud.
We have reached the end of this list of the 10 biggest crypto scams ever and you have seen what they all have in common – human greed and little research.
Scams will always be a part of human life, but it is up to you to protect yourself – by always staying level-headed and doing your research before investing.